AI has exploded in the workplace, with new tools designed to make us work smarter and faster popping up every day. It’s hard to keep up, and as management teams or business owners it’s hard to maintain control. Most companies simply aren’t – only 43% of businesses across the world have an AI policy in place.
That means most people are operating without clear rules around which tools they can use and what data they can input into the tools.
It’s important that management teams understand AI data handling and what happens to information put into public AI tools. Today we’re going to take a look at what happens to that data, and why Microsoft Copilot is a more manageable alternative.
Data Handling in AI Tools
Using public AI tools is exactly that – public. You paste your info in, hit send and it’s now out of your hands. Here’s what can happen to it:
Your data is transmitted to external servers
When you submit your prompt, it goes through to the AI provider’s server. These servers are outside your business environment and beyond your IT team’s control. They are likely to be located overseas and will be governed by the provider’s infrastructure policies rather than your own.
Your inputs may be used to train the AI model
Public AI tools, especially if you’re using their free tier, will use your conversations to improve and train their model. There are opt-out options in Gemini, ChatGPT and others, but the fact that they need to be disabled by default means most users don’t touch them. Are you comfortable with sensitive business data being used to train an LLM?
Human reviewers may read your conversations
Here’s one you may not expect – human review teams may look at the conversations with their AI. It’s for safety and quality purposes and is standard industry practice, even though you may not see it disclosed in the terms of service. Internal documents, client details, financial information, and whatever else your team uploads could all be read by someone working for the AI company.
Your data may be retained longer even if you delete it
Chat history and data is stored by default on AI platforms. Even if a user deletes their conversation with an AI tool immediately, the data shared may still be retained under the AI’s backup and logging policies. Sometimes it can be held for months – although retention periods vary.
Free and paid tiers are not the same
Platforms like ChatGPT and Gemini provide enterprise tiers with stronger protections. You can opt out of training data use and configure data handling. Most free consumer plans don’t offer this luxury – and most of your staff members aren’t going to have paid for a premium tier.
What Kind of Business Data Are Employees Pasting Into AI Tools?
Your team members are trying to get as much done as possible and using what’s at their disposal to do so. They’re not being malicious when they inadvertently upload sensitive data to public AI. But it’s a concerning way that information such as the following can end up outside of your work environment:
- Client names, contact details, and correspondence
- Financial figures, pricing, and proposals
- Staff performance notes or HR documents
- Internal strategy or planning material
2025 research found that sensitive data makes up nearly 35% of employee ChatGPT inputs, up from 11% in 2023. Under the Australian Privacy Act and it’s 13 Australian Privacy Principles, businesses have clear obligations around the handling of personal information. Sending it to an AI platform outside of your business environment will put you on the wrong side of those rules.
What Is Shadow AI?
Shadow AI is more widespread than management teams realise. It’s the slow accumulation of staff using whatever AI tools they find useful, with no policy or oversight in place.
The pattern tends to look like this:
- Staff find a free tool that solves a problem and keep using it
- No one in IT knows it’s happening
- No one has assessed what data is going into it
- No policy exists to guide what’s appropriate
One survey shows that 78% of workers use unapproved AI in their business day. That’s a risky proposition, and one you want to rein in at your organisation.
How Microsoft Copilot Keeps Your Data Inside Your Business
Microsoft Copilot takes a different approach to data handling, and the distinction is worth understanding.
Rather than sending your content to an external platform, Copilot operates inside your existing Microsoft 365 tenancy. Your prompts and documents don’t leave your environment. They’re processed within the same infrastructure your business already uses for email, file storage, and collaboration.
Key differences from public AI tools:
- Microsoft does not use your data to train its AI models
- Your data stays within your tenancy, subject to your existing security policies
- Copilot inherits your compliance settings, permissions, and data residency configurations
- Your IT team can manage access and apply governance controls through familiar admin tools
There’s no shadow AI problem, no external data policy to audit against your own, and no separate privacy terms to cross-reference.
Talk to Smile IT About Microsoft Copilot Adoption
At Smile IT, we’re all about safe and compliant AI use. It’s a remarkable tool that can bring huge benefits to your business – it just needs to be leveraged in the right way. A way that protects your data, your teams and your clients.
We work with Australian businesses to plan and implement Microsoft Copilot in a practical, compliant and useful manner. Our team can review your current Microsoft 365 setup, find the configuration gaps and guide you towards effective and safe use of Copilot. Your team get the productivity benefits of AI, and all your sensitive data remains within your organisational boundaries.
Let’s get your AI use under control. Get in touch with Smile IT today to talk through what Copilot adoption would look like for your business.
When he’s not writing tech articles or turning IT startups into established and consistent managed service providers, Peter Drummond can be found kitesurfing on Moreton Bay or hanging out with his family!